Basic Business Statistics, 10e © 2006 Prentice-Hall, Inc.. Chap 11-1 Chapter 11 Analysis of...

Basic Business Statistics, 10e © 2006 Prentice-Hall, Inc.. Chap 11-1

Chapter 11

Analysis of Variance

Basic Business Statistics10th Edition

Basic Business Statistics, 10e © 2006 Prentice-Hall, Inc. Chap 11-2

Learning Objectives

In this chapter, you learn: The basic concepts of experimental design How to use one-way analysis of variance to test

for differences among the means of several populations (also referred to as “groups” in this chapter)

When to use a randomized block design How to use two-way analysis of variance and the

concept of interaction


Chapter Overview

Analysis of Variance (ANOVA)

F-test

Tukey-Kramer

test

One-Way ANOVA

Two-Way ANOVA

InteractionEffects

Randomized Block Design

Multiple Comparisons


General ANOVA Setting

Investigator controls one or more independent variables Called factors (or treatment variables) Each factor contains two or more levels (or groups or

categories/classifications) Observe effects on the dependent variable

Response to levels of independent variable Experimental design: the plan used to collect

the data


Completely Randomized Design

Experimental units (subjects) are assigned randomly to treatments Subjects are assumed homogeneous

Only one factor or independent variable With two or more treatment levels

Analyzed by one-way analysis of variance (ANOVA)


One-Way Analysis of Variance

Evaluate the difference among the means of three or more groups

Examples: Accident rates for 1st, 2nd, and 3rd shift

Expected mileage for five brands of tires

Assumptions Populations are normally distributed Populations have equal variances Samples are randomly and independently drawn


Hypotheses of One-Way ANOVA

All population means are equal i.e., no treatment effect (no variation in means among

groups)

At least one population mean is different i.e., there is a treatment effect Does not mean that all population means are different

(some pairs may be the same)

c3210 μμμμ:H

same the are means population the of all Not:H1


One-Factor ANOVA

All Means are the same:The Null Hypothesis is True

(No Treatment Effect)

c3210 μμμμ:H same the are μ all Not:H j1

321 μμμ


One-Factor ANOVA

At least one mean is different:The Null Hypothesis is NOT true

(Treatment Effect is present)

c3210 μμμμ:H same the are μ all Not:H j1

321 μμμ 321 μμμ

or

(continued)


Partitioning the Variation

Total variation can be split into two parts:

SST = Total Sum of Squares (Total variation)

SSA = Sum of Squares Among Groups (Among-group variation)

SSW = Sum of Squares Within Groups (Within-group variation)

SST = SSA + SSW



Total Variation = the aggregate dispersion of the individual data values across the various factor levels (SST)

Within-Group Variation = dispersion that exists among the data values within a particular factor level (SSW)

Among-Group Variation = dispersion between the factor sample means (SSA)

SST = SSA + SSW

(continued)


Partition of Total Variation

Variation Due to Factor (SSA)

Variation Due to Random Sampling (SSW)

Total Variation (SST)

Commonly referred to as: Sum of Squares Within Sum of Squares Error Sum of Squares Unexplained Within-Group Variation

Commonly referred to as: Sum of Squares Between Sum of Squares Among Sum of Squares Explained Among Groups Variation

= +

d.f. = n – 1

d.f. = c – 1 d.f. = n – c


Total Sum of Squares

c

1j

n

1i

2ij

j

)XX(SSTWhere:

SST = Total sum of squares

c = number of groups (levels or treatments)

nj = number of observations in group j

Xij = ith observation from group j

X = grand mean (mean of all data values)

SST = SSA + SSW


Total Variation

Group 1 Group 2 Group 3

Response, X

X

2cn

212

211 )XX(...)XX()XX(SST

c

(continued)


Among-Group Variation

Where:

SSA = Sum of squares among groups

c = number of groups

nj = sample size from group j

Xj = sample mean from group j


2j

c

1jj )XX(nSSA

SST = SSA + SSW



Variation Due to Differences Among Groups

i j

2j

c

1jj )XX(nSSA

1c

SSAMSA

Mean Square Among =

SSA/degrees of freedom

(continued)




Response, X

X1X

2X3X

2222

211 )xx(n...)xx(n)xx(nSSA cc

(continued)


Within-Group Variation

Where:

SSW = Sum of squares within groups


nj = sample size from group j

Xj = sample mean from group j

Xij = ith observation in group j

2jij

n

1i

c

1j

)XX(SSWj

SST = SSA + SSW



Summing the variation within each group and then adding over all groups cn

SSWMSW

Mean Square Within =

SSW/degrees of freedom

2jij

n

1i

c

1j

)XX(SSWj

(continued)

jμ




Response, X

1X2X

3X

2ccn

2212

2111 )XX(...)XX()Xx(SSW

c

(continued)


Obtaining the Mean Squares

cn

SSWMSW

1c

SSAMSA

1n

SSTMST


One-Way ANOVA Table

Source of Variation

dfSS MS(Variance)

Among Groups

SSA MSA =

Within Groups

n - cSSW MSW =

Total n - 1SST =SSA+SSW

c - 1 MSA

MSW

F ratio

c = number of groupsn = sum of the sample sizes from all groupsdf = degrees of freedom

SSA

c - 1

SSW

n - c

F =


One-Way ANOVAF Test Statistic

Test statistic

MSA is mean squares among groups

MSW is mean squares within groups

Degrees of freedom df1 = c – 1 (c = number of groups)

df2 = n – c (n = sum of sample sizes from all populations)

MSW

MSAF

H0: μ1= μ2 = … = μc

H1: At least two population means are different


Interpreting One-Way ANOVA F Statistic

The F statistic is the ratio of the among estimate of variance and the within estimate of variance The ratio must always be positive df1 = c -1 will typically be small df2 = n - c will typically be large

Decision Rule: Reject H0 if F > FU,

otherwise do not reject H0

0

= .05

Reject H0Do not reject H0

FU


One-Way ANOVA F Test Example

You want to see if three different golf clubs yield different distances. You randomly select five measurements from trials on an automated driving machine for each club. At the 0.05 significance level, is there a difference in mean distance?

Club 1 Club 2 Club 3254 234 200263 218 222241 235 197237 227 206251 216 204


••••

•

One-Way ANOVA Example: Scatter Diagram

270

260

250

240

230

220

210

200

190

••

•••

•••••

Distance

1X

2X

3X

X

227.0 x

205.8 x 226.0x 249.2x 321

Club 1 Club 2 Club 3254 234 200263 218 222241 235 197237 227 206251 216 204

Club1 2 3


One-Way ANOVA Example Computations

Club 1 Club 2 Club 3254 234 200263 218 222241 235 197237 227 206251 216 204

X1 = 249.2

X2 = 226.0

X3 = 205.8

X = 227.0

n1 = 5

n2 = 5

n3 = 5

n = 15

c = 3SSA = 5 (249.2 – 227)2 + 5 (226 – 227)2 + 5 (205.8 – 227)2 = 4716.4

SSW = (254 – 249.2)2 + (263 – 249.2)2 +…+ (204 – 205.8)2 = 1119.6

MSA = 4716.4 / (3-1) = 2358.2

MSW = 1119.6 / (15-3) = 93.325.275

93.3

2358.2F


F = 25.275

One-Way ANOVA Example Solution

H0: μ1 = μ2 = μ3

H1: μj not all equal

= 0.05

df1= 2 df2 = 12

Test Statistic:

Decision:

Conclusion:

Reject H0 at = 0.05

There is evidence that at least one μj differs from the rest

0

= .05

FU = 3.89Reject H0Do not

reject H0

25.27593.3

2358.2

MSW

MSAF

Critical Value:

FU = 3.89


SUMMARY

Groups Count Sum Average Variance

Club 1 5 1246 249.2 108.2

Club 2 5 1130 226 77.5

Club 3 5 1029 205.8 94.2

ANOVA

Source of Variation

SS df MS F P-value F crit

Between Groups

4716.4 2 2358.2 25.275 4.99E-05 3.89

Within Groups

1119.6 12 93.3

Total 5836.0 14

One-Way ANOVA Excel Output

EXCEL: tools | data analysis | ANOVA: single factor


The Tukey-Kramer Procedure

Tells which population means are significantly different e.g.: μ1 = μ2 μ3

Done after rejection of equal means in ANOVA Allows pair-wise comparisons

Compare absolute mean differences with critical range

xμ1 = μ 2

μ3


Tukey-Kramer Critical Range

where:QU = Value from Studentized Range Distribution

with c and n - c degrees of freedom for the desired level of (see appendix E.9 table)

MSW = Mean Square Within nj and nj’ = Sample sizes from groups j and j’

j'jU n

1

n

1

2

MSWQRange Critical


The Tukey-Kramer Procedure: Example

1. Compute absolute mean differences:Club 1 Club 2 Club 3

254 234 200263 218 222241 235 197237 227 206251 216 204 20.2205.8226.0xx

43.4205.8249.2xx

23.2226.0249.2xx

32

31

21

2. Find the QU value from the table in appendix E.10 with c = 3 and (n – c) = (15 – 3) = 12 degrees of freedom for the desired level of ( = 0.05 used here):

3.77QU


The Tukey-Kramer Procedure: Example

5. All of the absolute mean differences are greater than critical range. Therefore there is a significant difference between each pair of means at 5% level of significance. Thus, with 95% confidence we can conclude that the mean distance for club 1 is greater than club 2 and 3, and club 2 is greater than club 3.

16.2855

1

5

1

2

93.33.77

n

1

n

1

2

MSWQRange Critical

j'jU

3. Compute Critical Range:

20.2xx

43.4xx

23.2xx

32

31

21

4. Compare:

(continued)


The Randomized Block Design

Like One-Way ANOVA, we test for equal population means (for different factor levels, for example)...

...but we want to control for possible variation from a second factor (with two or more levels)

Levels of the secondary factor are called blocks



Total variation can now be split into three parts:

SST = Total variationSSA = Among-Group variationSSBL = Among-Block variationSSE = Random variation

SST = SSA + SSBL + SSE


Sum of Squares for Blocking

Where:


r = number of blocks

Xi. = mean of all values in block i


r

1i

2i. )XX(cSSBL




Total variation can now be split into three parts:

SST and SSA are computed as they were in One-Way ANOVA


SSE = SST – (SSA + SSBL)


Mean Squares

1c

SSAgroups among square MeanMSA

1r

SSBLblocking square MeanMSBL

)1)(1(

cr

SSEMSE error square Mean


Randomized Block ANOVA Table

Source of Variation

dfSS MS

Among Blocks

SSBL MSBL

Error (r–1)(c-1)SSE MSE

Total rc - 1SST

r - 1 MSBL

MSE

F ratio

c = number of populations rc = sum of the sample sizes from all populationsr = number of blocks df = degrees of freedom

Among Treatments SSA c - 1 MSA

MSA

MSE


Blocking Test

Blocking test: df1 = r – 1

df2 = (r – 1)(c – 1)

MSBL

MSE

...μμμ:H 3.2.1.0

equal are means block all Not:H1

F =

Reject H0 if F > FU


Main Factor test: df1 = c – 1

df2 = (r – 1)(c – 1)

MSA

MSE

c..3.2.10 μ...μμμ:H

equal are means population all Not:H1

F =

Reject H0 if F > FU

Main Factor Test


The Tukey Procedure

To test which population means are significantly different e.g.: μ1 = μ2 ≠ μ3

Done after rejection of equal means in randomized block ANOVA design

Allows pair-wise comparisons Compare absolute mean differences with critical

range

x = 1 2 3


etc...

xx

xx

xx

.3.2

.3.1

.2.1

The Tukey Procedure(continued)

r

MSERange Critical uQ

If the absolute mean difference is greater than the critical range then there is a significant difference between that pair of means at the chosen level of significance.

Compare:

?Range CriticalxxIs .j'.j


Factorial Design:Two-Way ANOVA

Examines the effect of Two factors of interest on the dependent

variable e.g., Percent carbonation and line speed on soft drink

bottling process Interaction between the different levels of these

two factors e.g., Does the effect of one particular carbonation

level depend on which level the line speed is set?


Two-Way ANOVA

Assumptions

Populations are normally distributed

Populations have equal variances

Independent random samples are drawn

(continued)


Two-Way ANOVA Sources of Variation

Two Factors of interest: A and B

r = number of levels of factor A

c = number of levels of factor B

n’ = number of replications for each cell

n = total number of observations in all cells(n = rcn’)

Xijk = value of the kth observation of level i of factor A and level j of factor B


Two-Way ANOVA Sources of Variation

SSTTotal Variation

SSAFactor A Variation

SSBFactor B Variation

SSABVariation due to interaction

between A and B

SSERandom variation (Error)

Degrees of Freedom:

r – 1

c – 1

(r – 1)(c – 1)

rc(n’ – 1)

n - 1

SST = SSA + SSB + SSAB + SSE

(continued)


Two Factor ANOVA Equations

r

1i

c

1j

n

1k

2ijk )XX(SST

2r

1i

..i )XX(ncSSA

2c

1j

.j. )XX(nrSSB

Total Variation:

Factor A Variation:

Factor B Variation:



2r

1i

c

1j

.j.i..ij. )XXXX(nSSAB

r

1i

c

1j

n

1k

2.ijijk )XX(SSE

Interaction Variation:

Sum of Squares Error:

(continued)



where:Mean Grand

nrc

X

X

r

1i

c

1j

n

1kijk

r) ..., 2, 1, (i A factor of level i of Meannc

X

X th

c

1j

n

1kijk

..i

c) ..., 2, 1, (j B factor of level j of Meannr

XX th

r

1i

n

1kijk

.j.

ij cell of Meann

XX

n

1k

ijk.ij

r = number of levels of factor A

c = number of levels of factor B

n’ = number of replications in each cell

(continued)


Mean Square Calculations

1r

SSA Afactor square MeanMSA

1c

SSBB factor square MeanMSB

)1c)(1r(

SSABninteractio square MeanMSAB

)1'n(rc

SSEerror square MeanMSE


Two-Way ANOVA:The F Test Statistic

F Test for Factor B Effect

F Test for Interaction Effect

H0: μ1.. = μ2.. = μ3.. = • • •

H1: Not all μi.. are equal

H0: the interaction of A and B is equal to zero

H1: interaction of A and B is not zero

F Test for Factor A Effect

H0: μ.1. = μ.2. = μ.3. = • • •

H1: Not all μ.j. are equal

Reject H0

if F > FUMSE

MSAF

MSE

MSBF

MSE

MSABF

Reject H0

if F > FU

Reject H0

if F > FU


Two-Way ANOVASummary Table

Source ofVariation

Sum ofSquares

Degrees of Freedom

Mean Squares

FStatistic

Factor A SSA r – 1MSA

= SSA /(r – 1)MSAMSE

Factor B SSB c – 1MSB

= SSB /(c – 1)MSBMSE

AB(Interaction)

SSAB (r – 1)(c – 1)MSAB

= SSAB / (r – 1)(c – 1)MSABMSE

Error SSE rc(n’ – 1)MSE =

SSE/rc(n’ – 1)

Total SST n – 1


Features of Two-Way ANOVA F Test

Degrees of freedom always add up n-1 = rc(n’-1) + (r-1) + (c-1) + (r-1)(c-1)

Total = error + factor A + factor B + interaction

The denominator of the F Test is always the same but the numerator is different

The sums of squares always add up SST = SSE + SSA + SSB + SSAB

Total = error + factor A + factor B + interaction


Examples:Interaction vs. No Interaction

No interaction:

Factor B Level 1

Factor B Level 3

Factor B Level 2

Factor A Levels

Factor B Level 1

Factor B Level 3

Factor B Level 2

Factor A Levels

Mea

n R

espo

nse

Mea

n R

espo

nse

Interaction is present:


Multiple Comparisons: The Tukey Procedure

Unless there is a significant interaction, you can determine the levels that are significantly different using the Tukey procedure

Consider all absolute mean differences and compare to the calculated critical range

Example: Absolute differences

for factor A, assuming three factors:

3..2..

3..1..

2..1..

XX

XX

XX


Multiple Comparisons: The Tukey Procedure

Critical Range for Factor A:

(where Qu is from Table E.10 with r and rc(n’–1) d.f.)

Critical Range for Factor B:

(where Qu is from Table E.10 with c and rc(n’–1) d.f.)

n'c

MSERange Critical UQ

n'r

MSERange Critical UQ


Chapter Summary

Described one-way analysis of variance The logic of ANOVA ANOVA assumptions F test for difference in c means The Tukey-Kramer procedure for multiple comparisons

Considered the Randomized Block Design Treatment and Block Effects Multiple Comparisons: Tukey Procedure

Described two-way analysis of variance Examined effects of multiple factors Examined interaction between factors

Basic Business Statistics, 10e © 2006 Prentice-Hall, Inc.. Chap 11-1 Chapter 11 Analysis of...

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